Member Sign In

You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate but affiliated companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.

If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.

Bear of the Day: Ruby Tuesday's (RT)

You have chosen to follow this author. You will receive an email notification when this author publishes a new article. Click submit to continue.

You are alredy following the Author

The Author could not be added at this time, please try again later. If problem persists, please contact Zacks Customer support.

Please Login

Although the consumer is still relatively strong, the restaurant sector has been pretty mixed lately. Some companies have been able to do quite well in this environment, and see their share prices surge, while others, such as Ruby Tuesday’s (RT - Snapshot Report), have definitely struggled.

Ruby Tuesday’s in Focus

Ruby Tuesday’s is best known for its lineup of casual dining restaurants under the Ruby Tuesday brand name. The firm has about 800 restaurants in total, including several dozen international locations as well.

Ruby Tuesday’s saw strong growth and was a consumer darling leading up to the financial crisis—thanks in large part to their solid menu and salad bar—but it hasn’t really recovered from the Great Recession. The stock is flat over the past five years, while competitors like Darden (DRI - Analyst Report) or even McDonald’s (MCD - Analyst Report) have seen strong gains.

While the others have adapted to changing consumer tastes and have managed to expand operations, Ruby Tuesday’s has stagnated and now its earnings picture is in trouble.

RT Earnings in Focus

Ruby Tuesday’s has a pretty terrible track record when it comes to earnings season. The company has missed estimates in two of the last four quarters, and both misses were by more than -30%. The last quarter was especially poor, as the company missed expectations and posted earnings that were less than the year ago time frame.

Revenues were also weak for the quarter, as these slumped by about -4.6% (yoy). These also missed estimates, further showcasing the sluggishness in RT lately.

Thanks to this decline and concerns over the company’s near term future, analysts tracking the stock have been slashing their estimates for RT’s future. In fact, estimates for the current quarter have fallen from seven cents a share 60 days ago to negative four cents a share today. The current year figures aren’t any better, as these estimates have slumped from 36 cents a share two months ago, to just eight cents a share today.

Clearly, the prospects are quite poor for RT in both the near term and the long term. Thanks to this, we have assigned Ruby Tuesday’s a Zacks Rank #5 (Strong Sell), and are looking for the company to underperform in the months ahead too.

Other Picks

If investors are dead-set on investing in the restaurant sector, there are several better choices available. While there are no #1 Ranked stocks at this time, there are a handful of #2 Ranked securities, any of which could be solid choices in this market segment.

In particular, AFC Enterprises (AFCE), Domino’s Pizza (DPZ - Analyst Report), or Famous Dave’s (DAVE - Snapshot Report), could be intriguing picks. That is because, not only do all of these have Zacks Ranks of 2, but they have seen their ranks surge from hold ranks (or worse) into buy territory in just the past week, suggesting now could be the time to give these companies a closer look, especially when compared to the chronic underperformer of Ruby Tuesday’s.

Top Zacks Features

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

Zacks Research is Reported On:

At the center of everything we do is a strong commitment to independent research and sharing its profitable discoveries with investors. This dedication to giving investors a trading advantage led to the creation of our proven Zacks Rank stock-rating system. Since 1986 it has nearly tripled the S&P 500 with an average gain of +26% per year. These returns cover a period from 1986-2011 and were examined and attested by Baker Tilly, an independent accounting firm.

Visit performance for information about the performance numbers displayed above.